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The Decision That Drove the Economy Forward

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Sachit Grover The Decision That Drove the Economy Forward The downward spiral of the United States economy began in 2007. Initially, banks made careless loans to individuals. Following these careless loans, many couldn’t afford to stay in their homes. The credit crisis was occurring simultaneously with the housing market collapse. The credit crisis occurred when large financial institutions were on the verge of collapsing due to the risky loans issued to United States residents. In order to stabilize the economy, the United States government developed a two-pronged strategy. They would “bailout distressed financial institutions and industries and pump government money into the economy” (“The Great Recession of 2008-09”). Despite the astronomical costs and the overwhelming republican opposition to the bailout, it was necessary to bailout GM and Chrysler because the US economy would have declined profoundly with the loss of millions of jobs and a decreasing GDP if the companies weren’t bailed out. A grand total of nearly 80 billion dollars was invested in the auto-bailout. This 80 billion was obtained from the 700 billion dollar TARP (Troubled Asset Relief Program) package (Hassett). George W. Bush, a republican, was responsible for implementing the TARP package in 2008. This plan was deliberated for GM and Chrysler to produce more fuel-efficient vehicles. Prior to the recession, many vehicles had been immensely harmful to the environment. Large SUV’s and trucks dominated the roads. However, as gas prices climbed in 2007 to nearly $135 per barrel, consumers struggled to pay for gas. As a result, fewer vehicles were purchased. However, a few years later, the auto-bailout proved to be a large success. Profits for GM and Chrysler h... ... middle of paper ... ...rint. Bunkley, Nick. "This Time, 16 Million Sales Forecast Is on Merit." Autonews.com. N.p., 28 Dec. 2013. Web. 16 May 2014. Bury, Chris. "Bail-Out Politics: Even Michigan’s Economy Is Improving." Abc.com. N.p., 15 Feb. 2012. Web. 16 May 2014. Curing the Great Recession. Franchi, May 2014. Web. 16 May 2014. "GM Reports 2013 Net Income of $3.8 Billion." GM.com. General Motors, 6 Feb. 2014. Web. 26 May 2014. "The Great Recession of 2008–09: Year in Review 2009." Britannica.com. Ed. Joel Havemann. N.p., n.d. Web. 26 May 2014. Hassett, Kevin A. "Obama's Auto-Bailout Fiction." National Review: n. pag. Print. "Inside the Meltdown." Pbs.com. PBS, n.d. Web. 26 May 2014. Isidore, Chris. "3 Answers to the Auto Bailout Debate." Cnn.com. N.p., 6 Sept. 2012. Web. 16 May 2014. Rattner, Steven. "Delusions about the Detroit Bailout." The New York Times 23 Feb. 2012: n. pag. Print.
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